Significant changes have been made to the commercial rates regime by way of the Historic and Archaeological Heritage and Miscellaneous Provisions Act 2023. Alice Whittaker does the sums
If you occupy, or are entitled to occupy, a rateable ‘relevant property’ (as defined in the Valuation Act 2001, as amended), you may be liable to pay your local rating authority a commercial ‘rate’.
You may also have a number of additional obligations to the local authority in relation to those rates. Significant changes have been made to the commercial-rates regime by way of the Historic and Archaeological Heritage and Miscellaneous Provisions Act 2023, as of 1 January 2024.
The act makes a number of important amendments to the Valuation Act 2001 and the Local Government Rates and Other Matters Act 2019, including the imposition of criminal liability for the failure to notify a local authority of ceasing to be, or becoming, the person liable to pay the rates on a relevant property, and for a failure by a liable person who intends to sell a property to discharge any outstanding rates due by that person prior to the sale of a relevant property.
Calculus
In order to be subject to a rate, a property must be a ‘relevant property’. The Commissioner of Valuation periodically publishes a ‘valuation list’, which lists each relevant property in a rating authority area and the rateable valuation of that relevant property (see valoff.ie/en/check-propertyvaluation-online).
As set out in section 4 of the 2019 act (as substituted by section 263 of the 2023 act), the amount of the rate for a financial year is calculated by multiplying the rateable valuation of the relevant property on the last day of the previous financial year by the annual rate on valuation (ARV).
The rate is due and payable from the first day of the relevant financial year. While the ARV is decided on by the rating authority, the rateable valuation of a relevant property is determined by the Commissioner of Valuation.
If a person is dissatisfied with the valuation as determined by the commissioner, or indeed the determination to include the property on the valuation list, that valuation or determination can be appealed to the Valuation Tribunal (with a further appeal on a point of law to the High Court).
Section 258 of the 2023 act has amended section 38 of the 2001 act to clarify that an amendment to the valuation list as a result of a decision of the Valuation Tribunal or the court has full force from the date of the making of the amendment.
It also provides for the refund to, or recovery from, a person concerned of a balance owing or owed (as the case may be) caused by an amendment to the valuation list that resulted in an overpayment or underpayment of rates (for indicative rates, see valoff.ie/en/revaluation/rates-calculator).
Differentiation
In accordance with section 4 of the 2019 act (as substituted by the 2023 act), the ‘liable person’ upon whom a rate may be levied is either:
- The occupier of the relevant property on the first day of the relevant financial year, or
- If the relevant property is unoccupied on that day, the person who is entitled to occupy the property on that day.
If there is a change to the liable person during the financial year, the rate is levied on a pro rata basis between the liable persons.
Constant
Section 32 of the Local Government Reform Act 2014 imposed a duty on an owner of a relevant property to notify a rating authority of a transfer of that property if such transfer would result in a change of the person liable to pay the rates.
The duty to discharge the outstanding rates fell on the person transferring the property (be it the owner or the occupier). However, if the owner of the property failed to notify the rating authority within two weeks of such a transfer, they could potentially have become liable for a charge equivalent to up to two years of any outstanding rates due by a previous occupier.
As of 1 January 2024, section 32 of the 2014 act has been repealed and effectively replaced by section 11 of the 2019 act (as substituted by section 267 of the 2023 act). Section 11 now imposes a duty on the ‘person concerned’ to give written notice to the rating authority within ten working days as to any change in their status as a ‘person concerned’.
A ‘person concerned’ is a person who either (a) ceases to be a ‘liable person’ in respect of a relevant property, (b) becomes a ‘liable person’ in respect of a relevant property, or (c) changes their status as a ‘liable person’ in respect of a relevant property.
In contrast with the position under the 2014 act, the new regime means that if a person, without ‘reasonable excuse’, fails to provide such notification to the rating authority, they may be guilty of an offence and liable to a €5,000 fine.
It will be interesting to see whether the replacement of the power to levy a charge on the property in respect of unpaid rates under section 32 of the 2014 act with the threat of criminal liability and a generally collected €5,000 fine under the 2019 act (as substituted by the 2023 act) results in a greater or lesser payment of rates to local authorities.
Continuous function
Section 13 of the 2019 act has been substituted by section 269 of the 2023 act, such that a liable person in respect of a relevant property who proposes to sell that property must, before the completion of the sale, pay to the local authority any rates and interest imposed under the 2019 act that are due and payable by that liable person in respect of that property for the period up to and including the day immediately before the completion of the sale.
The amendment will be beneficial for both landlords and tenants alike, as landlords may sell a property without the requirement to discharge the outstanding rates, as the obligation to discharge the rates now falls to the ‘liable person’ – for example, the sitting tenant.
Additionally, a tenant will only be responsible for the commercial rates for their own period of liability/occupation. However, any rates that are due under the previous legislation (prior to 1 January 2024) are still governed by the 2014 act.
The new regime imposes strict notification timelines on both the vacating and incoming liable persons. Interestingly, there is also a requirement for a liable person to notify the local authority in writing if they become aware of any inaccuracies recorded in the database.
Non-compliance with the new amendments or failure to discharge outstanding rates and interest for which they are liable before the completion of a sale carries stringent penalties, including summary conviction, a €5,000 fine, and/or imprisonment for up to six months.
Therefore, it is imperative for any party affected by the new amendments to take legal advice.
Alice Whittaker is a solicitor and partner in the planning and environmental department at Philip Lee LLP.
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